Talent management is a hot topic within the Human Resources (HR) software market. This software category refers to two primary functions: the acquisition of new hires and development of employees. There are more than 100 different software solutions available to improve your processes of interviewing, hiring, onboarding and retaining employees. Learning management is also increasingly being considered as part of this application category. With the HR market in constant evolution, we thought this guide would help you make better, more informed buying decisions.

What Is Talent Management Software?

Talent management software is the trump card when it comes to successful acquisition, development and retention within an organization. That’s because with the right system, hiring managers can easily track applicants, stay organized throughout the interview process and minimize the paper trail when onboarding new hires.

It's certainly possible for companies to buy separate, "stand-alone" systems for each of these tasks—for example, one solution for tracking applicants, another for new-hire onboarding, and so on. But for companies looking to automate all of the above, a comprehensive talent management suite will incorporate all of these functionalities.

The top platforms also help modernize and streamline the performance review processes. Employees and managers can track individual performance goals and accomplishments throughout the year, making the review process a collaborative effort with measurable success.

With the evolution of cloud computing, complex processes have been revolutionized by engaging and involving a broader set of employees and managers. Cloud computing, or Software as a Service (SaaS), gives users the ability to tap into resources from anywhere there is Internet access. These Web-hosted, feature-rich solutions enable candidates to view and apply for your open positions online, answering specific questions and submitting important documents without flooding email in-boxes. Hiring managers can quickly access key information and identify their best applicants, minimizing time spent filtering through countless emails.

Core functionality includes:

Online applications

Interdepartmental communications

Resume import function

Applicant flagging/fast-tracking

Candidate tracking

Real-time performance documentation

Key document tracking

Goal tracking

Electronic record-keeping

Employee self-service

Why Do Companies Buy Talent Management Software?

Over the years, we’ve spoken to hundreds of companies considering the purchase of talent management software. As a point of reference, we thought it would be helpful to provide potential buyers with an overview of past clients’ main application requests, as well as reasons for purchasing this type of software.

The number one application requested by companies searching for talent management software was performance review, while applicant tracking and recruiting came in second.

Almost half of the buyers we spoke with were looking to automate and/or improve their efficiency or effectiveness with the purchase of a new talent management system.

Also interesting to note, the sizes of businesses seeking talent management software spanned a wide range. It seems that talent management is a concern for companies of all sizes.

However, the type of talent management system you purchase will most likely be dependent on the number of employees you currently have, and the type of software you currently employ. As such, it is important to note that there are several different types of buyers.

Benefits and Potential Issues

Modernizing the approach a company takes to attracting and retaining talent makes it easier to keep employees motivated and engaged. Furthermore, by streamlining the processes for acquiring and retaining talent, employers can stay better organized and communicate more effectively. With candidate and employee information available at their fingertips, managers and HR professionals can quickly accomplish routine tasks to focus on more strategic initiatives. And employees that have a sense of their value within an organization are far less likely to leave than those who don’t. Having the right talent management tools is important to taking your people processes to the next level.

What Type of Buyer Are You?

Before you purchase a system, it is important to assess what kind of buyer you are. We believe that the majority of buyers fall into one of these categories:

Integrated suite buyers. These buyers work for organizations where some, or all, of the HR processes have become disjointed and inconsistent. They need reliable solutions to improve operational efficiency within their existing HR processes, while effectively updating their management of top talent. Quite simply, these buyers are looking to implement a range of applications, all within one integrated suite. Integrated HR suites with robust functionality are often the best solution.

Best-of-breed buyers. These buyers work for large organizations specifically interested in updating acquisition, development and retention strategies and processes. They need straightforward, easy-to-use talent management system tools that can be implemented into a complex operation with minimal interruption. Functional depth is critical to meet demanding departmental requirements, and best-of-breed systems with high SaaS capability offer the best solutions.

Cost-conscious buyers. These buyers work for organizations that are looking to update their existing systems while keeping costs low. Although there are less expensive on-premise options available, the evolution of SaaS in HR software is changing the industry. That’s because organizations with more limited resources are able to access a broad range of solutions. Cost-conscious buyers looking to enhance their acquisition process should consider stand-alone, best-of-breed applications to integrate with their existing HR systems, either on-premise or on in a hosted, SaaS-based model.

Market Trends to Understand

These trends should be considered as you research talent management solutions.

Consolidation. Recently, larger HR software companies have aggressively acquired many best-of-breed solutions as a means of strengthening the arsenal of their integrated suites. For buyers, this means increased functionality and integration with the rest of your HR system. These integrated suites offer across-the-board functionality, which provide users with a one-stop shop. Larger vendors have the resources to offer more customer support, and offer easy-to-implement solutions. The downside? Service sometimes experiences disruptions as vendors are acquired. Locking in rates and service/maintenance terms should minimize any discrepancies.

Software as a Service. SaaS has changed the HR landscape, offering exceptional usability for managers and employees at every step in the process. With its Web-based interface, SaaS offers buyers the tools to simplify and streamline complicated processes, such as applicant tracking and performance appraisal. Improved accessibility translates to increased usability, which in turn creates a more cohesive and collaborative effort when interviewing candidates or reviewing employee performance.

Strategic HR.Regardless of industry or size, an organization’s greatest resource is its people. Today, some of the most successful companies are focused on enabling HR professionals to harness this resource to its fullest. Analysts have been coining phrases like proactive management, talent pooling and retention strategies for a while now, and branding this category of software as “strategic HR.” Modernizing the process of attracting, acquiring and developing talent with these strategic tools enables an organization to consistently build the value of its talent pool. Buyers should consider whether they purchase these strategic HR tools from an existing HRMS vendor or a pure-play strategic HR vendor.